A challenge for monetary authorities in a liquidity trap is that it is hard convince people that they won’t reverse expansionary policies as soon as the economy leaves the liquidity trap. The other problem is that they can’t do much other than affect expectations while the economy is in a liquidity trap. This suggests that […]
Barry Ritholtz points us to how essential US government intervention was for the banking system and in particular existing banks and the management at The Big Picture. It has links worth pursuing as well. I continue to be of the mind that the Wall Street Bailouts were misguided, and that a massive Swedish style reorg […]
Economists for Obama suddenly showed up in my RSS reader again. It’s not a pretty sight: I suppose I might change my mind, but after watching the President give in to the Boehner-McConnell blackmail axis, I don’t imagine I’ll be spending much of my time advocating his re-election. Assuming he’s the Democratic nominee, which I […]
Spent the morning at this event: presentations and discussion by Joe Stiglitz, Yves Smith, Mike Konczal, Joe Gagnon, Matt Yglesias, Tom Palley, and many others. Mike K. tole me he expects that video will be available this evening, at least of the speakers’s presentations. I plan to post at more length later; meanwhile, you can […]
Barry Ritholtz at The Big Picture points to Pro Publica regarding Tarp and other bailout monies: Pro Publica has been maintaining a list of bailout recipients, updating the amount lent versus what was repaid. So far, 938 Recipients have had $607,822,512,238 dollars committed to them, with $553,918,968,267 disbursed. Of that $554b disbursed, less than half […]
This is actually good news, since everything else the Fed has done has been to benefit the insolvent large banks. Still, I didn’t expect my post of three days ago to be such a perfect “negative indicator” so soon.
Fortune published an op-ed piece by Keith R. McCullough at Hedgeye (h/t to my Mom). He argues (not very well, I might add) that QE2 is the doomsday scenario for “markets”. I’d like to point out the following (mostly because this is a common mistake): what the Fed announced is NOT QE2. Furthermore, the Fed’s […]
It was their idea, so it’s no surprise they like paying interest on reserves, even excess reserves: For quite a while, the Fed was quite happy to have that money on its books. Indeed, the power to pay interest on reserves was considered a key tool to keep control over all the liquidity the Fed […]
Discussion point: Is it time for the Fed to start contracting its’ balance sheet and otherwise withdrawing the special financing it provided while it was faced with the zero interest rate boundand preparing to soon raise fed funds. My fed policy index says the zero bound should no longer apply and that it is time […]
Go read: If you’re only reading one post, see FT Alphaville, which incorporates and expands upon… Tom Adams and Yves Smith’s posting at Naked Capitalism discussing the document and the reality of the situtation. the document itself is available from either The Long Room or the Huffington Post. If the FRB of NY really believed […]